Today’s television industry is very much like a wrestling match. In one corner stands the champion, the current structure where pricing and packaging are driven by the content providers. In the other corner is the fast-rising newcomer: OTT.
The term OTT means “over the top,” and is used to describe television programming that is available outside of a TV subscription. This includes services like Netflix, Hulu Plus and Amazon Instant Video.
These services charge a subscription fee for users to watch movies, TV shows and even original programming — and the approach is changing peoples’ viewing habits. For example, the Netflix political drama “House of Cards” released its second season in February, and almost 700,000 Netflix subscribers watched all 13 episodes in the first weekend. Viewers are becoming more interested in watching what they want, when they want to watch it (even if that means spending their weekend consuming 13 hours of a political drama).
Also in February, we saw the launch of a service that is different from anything we’ve seen so far. The WWE Network offers wrestling fans original programming, a back catalogue of shows spanning decades and access to its pay-per-view events — all for $9.99 per month. And it’s only available over the top. Will this be a model that other niche providers pursue? Would consumers pay a separate fee for that kind of access to football or basketball? Home improvement or gardening shows? It remains to be seen.
We all use our TVs to connect with traditional programming, like the packages offered by PRTC. But how do people access the OTT programming? The list of devices is long, and continues to grow. There’s the popular Roku and Apple TV, devices that connect to your television and your home’s Internet connection. In April, Amazon introduced its own video streaming device. Some devices with different primary functions, like the PlayStation, Xbox and Blu-ray players, also provide access to OTT services. And many newer television sets have built-in OTT functionality.
Rick Schadelbauer is an economist with NTCA—The Rural Broadband Association. In a recent industry report, Rick shared with us that the number of households with connected TVs is on the rise. “According to a study recently released by The Diffusion Group (TDG), more than six in 10 U.S. households have at least one television connected to the Internet in order to access content from online services,” he wrote. And that number is up 19 percent from 2013.
These numbers, along with the OTT examples I mentioned above, paint a clear picture: television entertainment is rapidly evolving. Adding more pressure to change is the fact that content providers continue to demand more money from companies like ours, while telling us what channels we must carry and where we must place them in the lineup.
As we watch this match play out, there is good news for members of PRTC. We continue to invest in creating a robust broadband network, and we will be ready to provide you with a reliable connection to whatever services you decide to access — across whatever device you decide to connect to our network.